Opening address to the 133rd (Extraordinary) Meeting of the OPEC Conference

No 18/2004
Cairo, Egypt
10 Dec 2004

by HE Dr Purnomo Yusgiantoro, President of the Conference and Minister of Energy and Mineral Resources for Indonesia.

Excellencies, ladies and gentlemen,

Welcome to the 133rd Extraordinary Meeting of the OPEC Conference.

We should like to extend a special welcome to His Excellency Mohamed Bin Dhaen Al Hamli, the Minister of Energy for the United Arab Emirates, who is attending our Conference for the first time, as Head of his country’s Delegation. We wish his predecessor, His Excellency Obaid bin Saif Al-Nasseri, every success and happiness in the future.

Let us also congratulate His Excellency Rafael Ramirez, on his recent appointment as President and Chief Executive Officer of Petroleos de Venezuela, a task he is combining with that of Minister of Energy and Mines. One of His Excellency’s first tasks in this dual role was to open an informative and well-organised workshop his country hosted on upstream petroleum contracts a fortnight ago.

Thirdly, I should like to extend a warm welcome to Mr. Abdulilah Kasim Al-Amir, who is heading the esteemed Delegation of Iraq today, HE Dr. Thamir Ghadban, Minister of Oil, being prevented from personally joining us by unforeseen commitments.

I should like to express the heartfelt appreciation of our Organization to the Government of Egypt, for inviting us to hold this important meeting in their capital city of Cairo, and for providing us with such excellent facilities for this purpose. We remember with affection the warm hospitality we received when we held a Consultative Meeting of our Conference in Cairo three years ago.

His Excellency Amin Sameh Fahmy, the Minister of Petroleum for Egypt, and other senior officials from our host country have attended many of our Conferences as observers in recent years, and the support this country’s Government has shown for our market-stabilisation measures has added to their effectiveness in the world at large.

We are also pleased to welcome Heads of Delegation and officials from other non-OPEC oil-producing countries, who are attending today’s Meeting as observers — from, namely, Angola, Oman, Russia, Syria and Sudan. Their presence underlines, in a similar manner, the importance their Governments attach to constructive dialogue and cooperation with OPEC and its Member Countries. We all stand to gain from a stable, orderly oil market.

The purpose of this Extraordinary Meeting is to review current developments in the international oil market and to see, in particular, whether we need to make any adjustments to our production agreement. This is of notable significance as we enter the Northern Hemisphere winter, when demand for heating oil is traditionally strong, and when we are only a few months away from the second quarter of 2005, when oil demand is normally relatively low.

Our meeting comes at the end of a year in which the market has been characterised by excessive volatility and high prices, caused by a combination of factors on both the demand and supply sides, whose effects have been compounded by strong speculative activity in futures markets. Dominating these factors have been: higher-than-expected oil demand growth; geopolitical tensions; a slowdown in the growth of some non-OPEC supply; and downstream bottlenecks and restrictions in some major consuming regions. Throughout the year, however, the market has remained well-supplied with crude and fundamentals have been sound.

As we have pointed out before, OPEC has no control over factors like speculation, geopolitical tensions and domestic decisions made by foreign governments. Nevertheless, we are doing everything we can to restore order and stability to the market, with reasonable prices that are acceptable to producers and consumers alike, as well as being compatible with steady growth in the world and domestic economies. The agreement we reached at our last Meeting — on 15 September — was to raise our production ceiling (excluding Iraq) by 1.0 million barrels a day to 27.0 mb/d, with effect from 1 November.

Since that Meeting, however, prices at first reached record levels, with the OPEC Reference basket price standing at $46.61 on 21 October, before beginning a downward trend in November. On 8 December, the ORB price stood at $33.78, or some 27.5% below the record level registered in October.

The task that lies before us at today’s meeting, therefore, is to establish the best assessment of the true state of the oil market at the present time, in the light of the widely fluctuating trends that have been a feature of the market’s behaviour in 2004. This is by no means an easy task. We are also concerned about the recent heavy falls in the value of the US dollar, in which international crude oil sales are priced and which will have a direct impact on the value of our petroleum revenue.

The focus of our attention today will be on the first two quarters of 2005, although our assessment of fundamentals will extend further into the future. In the final analysis, we seek prices that are sustainable for long periods and can withstand heavy pressure from the market, especially excessive speculative activity.

Excellencies, ladies and gentlemen,

Let me conclude this opening address by once again expressing the deep appreciation of our Conference for this invitation to hold our Extraordinary Meeting in Cairo, and by sending our warmest greetings to: His Excellency President Hosni Mubarak; His Excellency Amin Sameh Fahmy, the Minister of Petroleum; and the Government and people of Egypt.